What Does Declaring Bankruptcy Do to Your Credit?

what does declaring bankruptcy do to your credit

What Does Declaring Bankruptcy Do to Your Credit?

Many people who reach out to Arizona bankruptcy lawyers are already in a panic over their finances. They’re at the end of their rope and they just want some peace. But they also want to keep their credit in some standing and fear that bankruptcy will ruin the chances of that. It really depends on how much you owe, who you owe it to and what the status of your various debts are.

How Bad is Your Credit Now?

Most people don’t even consider filing bankruptcy until they owe a lot of money. By this point, their credit really isn’t all that great. Filing a bankruptcy in Arizona may be a good option for you. What you should do is call and talk to a bankruptcy lawyer in Arizona. They’ll look over your credit report and see how much you owe. They’re familiar with a lot of the creditors and know which ones are willing to negotiate a settlement. If you’re able to do that, then it may be an option. However, if you know that you don’t have a lump sum to offer, then bankruptcy may be the way to go.

Have You Considered Using a Debt Consolidation Company?

Years ago, people would run up a bunch of debt and then just file bankruptcy in Arizona. The laws have changed, and the courts have made it a bit harder to do that. A bunch of companies started springing up called debt consolidation companies. What they companies do is collect a certain sum of money from you every month. They then make payment arrangements with all your creditors. They do this for a fee. Sometimes, they can get reduced settlements for you. But you really do want to talk to a bankruptcy attorney in Arizona before you do anything or sign any agreements.

Filing Bankruptcy in Arizona Can Actually Help Your Credit in the Long Run

For some people, filing for bankruptcy in Arizona may be the best thing for you. If you have debt that has already been charged off, it will continue to hurt your credit until one of three things happen. Either you pay it off through a payoff or a settlement. Or you file a chapter 7 bankruptcy in Arizona and hope that the debt is discharged. Or you wait until it falls off of your credit. Keep in mind, it can take more than five years for this to happen. Show your Arizona bankruptcy attorney your credit report. They can let you know how a bankruptcy will affect it in the short-term and the long-term.

Bankruptcy May Be Your Only Option

It’s one thing if you owe $10,000 in debt. That may be something you can manage some other way. However, if you owe over $100,000 in credit card debt alone, odds are, there is no other solution. However, nobody can make that decision for you. Your Arizona bankruptcy attorney can certainly discuss your options with you. If credit is something you’re concerned about, then it will really depend on whether you can get out from under the debt some other way.

Call and Discuss a Bankruptcy in Arizona

You may have no idea what to do right now. If you’re in over your head financially, then something has to change. You may want to call our office and discuss a bankruptcy in Arizona. For some people, this is the only option. They owe so much that there’s no way they’ll ever be able to pay it off. For other people, there are other ways out. Maybe you can get a consolidation loan. Or you may be able to settle some of your debts. Talk to one of our bankruptcy attorneys in Arizona and find out what your best option may be.